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Good a Is a Luxury and Good B Is a Necessity

Question 159

Multiple Choice

Good A is a luxury and Good B is a necessity. Good C competes with many substitute products while Good D has few substitutes. You would expect the demands for goods:


A) A and B to be price elastic, and C and D to be price inelastic.
B) A and C to be price elastic, and B and D to be price inelastic.
C) B and D to be price elastic, and A and C to be price inelastic.
D) C and D to be price elastic, and A and B to be price inelastic.

Correct Answer:

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